Ten years on, second-home stamp duty surcharge linked to fewer rentals and higher rents
A decade after the stamp duty surcharge on additional homes was introduced on April 1, 2016 in England and Scotland, Hamptons said the policy has reduced landlord buying and constrained the private rented sector.
The surcharge began at 3% in England and was increased to 5% in October 2024. Wales applies a 5% surcharge and Scotland 8%. Hamptons said a £350,000 buy-to-let in England now attracts a £25,000 stamp duty bill for an investor, compared with £7,500 for a mover and £2,500 for a first-time buyer.
Hamptons said surcharge payers accounted for 48% of residential stamp duty revenue in 2024/25, despite making up a smaller share of transactions.
It estimated there are 2.2 million fewer privately renting households than would be expected if pre-2016 growth had continued, with around 5.2 million renting privately today versus an estimated 7.4 million. It also said there were 25.4% fewer homes available to rent in February 2026 than in February 2016.
Investor activity rose ahead of the April 2016 deadline, with landlords buying 16.5% of homes in the preceding 12 months, above a five-year average of 14.5%. Hamptons said the landlord share has averaged 11.8% since, falling to 10.8% so far in 2026 after the 2024 increase.
Hamptons said rents across Great Britain have risen 44.1% over 10 years, compared with CPI inflation of 39.9%, and estimated the surcharge added about 1 percentage point to annual rental growth, equivalent to around £70 a month.
On buyers, Hamptons said competition from investors has eased overall: 26% of first-time buyers faced investor competition before the surcharge, versus 19% now. It said competition has increased in cheaper regions, including the North West, Yorkshire & Humber, Scotland and Wales.
Annual rental growth for newly let homes turned positive for the first time since June 2025, with new rents up 0.6% year-on-year to £1,368 a month. London rents rose 1.%, led by Inner London at 2.6%. Hamptons said London listings were down 42.4% on 10 years ago, with Outer London down 50.7%.
“Higher rates of stamp duty for anyone buying a second home have broadly delivered what the government of the day set out to achieve,” said Aneisha Beveridge (pictured right), head of research at Hamptons. “Almost overnight, the market tilted away from investors, meaning far fewer homes have been added to the rented sector and more have found their way into owner-occupation over the last decade.
“However, large stamp duty bills have also brought side effects, particularly as the wider tax and regulatory environment for landlords has tightened. Tenants who can’t afford to buy, or don’t want to, have seen rents rise faster than inflation, while those on the margins of the market have found it increasingly difficult to find somewhere to rent in the first place.
“Domestic and international landlords were once some of the biggest buyers of city centre flats. Prior to 2016, housebuilders often had waiting lists of investors, sometimes years before they even put a spade in the ground. Their partial withdrawal has reduced viability and slowed the pace of housebuilding, particularly in the new-build apartment sector, where sales are now taking longer and often completing at lower prices.
“With D-Day for the Renters’ Rights Act now less than 50 days away, rental growth has started to creep up. But awareness of the many upcoming changes remains relatively low among landlords, and so far there have been few signs that landlords are looking to push up rents specifically ahead of May 1. Whether the Renters’ Rights Act proves to be inflationary for rents will ultimately depend on how well it works in practise for landlords.”
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